Ajax closure could hurt automotive industry: administrator

The administrator says the closure of Ajax Fasteners in Melbourne's south-east could impact on thousands of automotive industry workers across the country.

Around 190 staff at the company's Braeside factory were stood down late yesterday.

Firm KordaMentha was appointed as a receiver after a day of negotiations between unions, the company's administrator and its owner Allen Capital.

Company administrator Stephen Longley from PricewaterhouseCoopers says conditions imposed by the receiver means the firm can no longer supply customers including Ford and Holden.

"Every part that we sell actually has the Ajax brand on it - we can't use that brand name now without the receiver's consent," he said.

"So we can't actually dispatch goods to customers with those brand names on it until we resolve this and we can't make any new parts because we're not allowed to touch the plant equipment without the agreement of the receivers."

He says the worst case scenario may see Ajax close at the end of this week and not reopen again.

"Potentially shutting down some of our customers later in the week and potentially them not reopening until after their Christmas shutdown period, so not a great time for this to occur in the lead-up to Christmas," he said.

Industry problems

Australian Industry Group (AIG) spokesman Tim Piper says the problems at Ajax are indicative of the car industry.

"Inevitably we're in a global market and it will get tougher there's no doubt about that," he said.

"We're going to see a situation where tariffs are reduced, so therefore the car companies are going to want margins by the suppliers reduced even further, so it will get tougher.

"But at the same time we have to be more innovative, we have to be looking to overseas markets to supply to and we have to be looking to overseas markets to outsource from."

Workers' entitlements

Ajax workers have also been told they could lose millions of dollars in entitlements.

Unions have vowed to block the removal of all assets from the firm's Braeside factory until they are paid entitlements, worth more than $12 million.

But Mr Longley says they are unlikely to receive the full amount.

"If we're able to continue trading through to March under the funding agreement struck with the customers, we're still going to come up somewhere between $3 and $4 million short in being able pay out everyone's entitlements in full," he said.

"The way the cash is flowing we will not have enough funds, the employees will have to leave and wait for their redundancy pay out."

But Australian Workers Union spokesman Cesar Melhem says it wants the full entitlements to be paid to Ajax workers.

He says the union is sick and tired of everyone looking after their own interests, including the car makers.

"The only interest they have in the whole process is to buy time so they can source the product from overseas," he said.

"We've got the owners of Ajax interested in getting their money, the administrator and the receiver will get their fees for their work and the only ones left in the cold will be the workers."